DJ's confident despite retail slowdown

Page Tools

Department store David Jones Ltd is confident of earnings growth
despite a slowing retail sector after today reporting a record
interim profit.

The upmarket retailer's net profit rose 21.9 per cent to $52.89
million for the first half of 2004/05.

The result was underpinned by a strong contribution from the
company's core department store business, which posted a 19.7 per
cent increase in EBIT (earnings before interest and tax) to $59.6
million.

The strong performance comes as many retailers are encountering
the beginning of a downturn in consumer spending.

Arch rival Myer, which is owned by Australia's largest retailer
Coles Myer Ltd, recently announced a mere 2.4 per cent improvement
in its retail EBIT to $60.7 million for the same period.

David Jones' credit card business also delivered a strong
result, reporting a 24.4 per cent rise in EBIT to $15.3 million for
the period.

Chief executive Mark McInnes said he was pleased with the
company's performance.

"Our 1H05 profit result is the strongest first half profit
result that our company has reported since listing in 1995," he
said.

Mr McInnes added that David Jones' business model would help it
achieve earnings growth between five to 10 per cent this year and
beyond, despite softening retail spending.

"We are confident that our business model will enable us to
outperform the economic cycle, even in times of slower revenue
growth," he said.

"We have spent considerable time over the past six months
preparing our business for this slowdown and ensuring we have
measures in place to enable the company to outperform the economic
cycle by delivering NPAT (net profit after tax) growth at the top
end of our five to 10 per cent guidance in FY05 and an attractive
full year dividend to shareholders."

Mr McInnes said David Jones would continue to focus on
streamlining its business.

"Whilst we have made excellent progress to date in our cost
efficiencies program, we believe, based on work we have undertaken
to date, that there are significant additional savings to be
generated through cost efficiencies in FY06, FY07 and FY08."

David Jones also announced an overhaul of its shareholder
rewards program, which has been monitored since Coles Myer ditched
its shareholder card last year.

The review will include the abolition of the annual fee and a
reduction of the minimum shareholding threshold. It is expected to
deliver cost savings between $2.5 million and $3 million each
year.

A fully franked interim dividend of six cents was declared, up
from five cents in 2003/04.